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I'm left-leaning and hence am generally supportive of government intervention. However, I like to see it limited to extreme cases. This is definitely true when it comes to business where everyone is trying to profit one way or another. A good example is the unfolding saga of the American auto manufacturers.

The White House on Sunday pushed out the chairman of General Motors and instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid.

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Mr. Obama’s auto industry task force, in a report released Sunday night assessing the viability of both companies and detailing the administration’s new plans for them, concluded that Chrysler could not survive as a stand-alone company.

The report said the company would get no more help from the government unless it can finalize a proposed alliance with the Italian automaker Fiat by April 30. It must also reduce its debt and health-care obligations.

If a deal is reached between Chrysler and Fiat, the administration says it would consider another loan of $6 billion to Chrysler.

G.M., on the other hand, has made considerable progress in developing new energy-efficient cars and could survive if it can cut costs sharply, the task force reported. The administration is giving G.M. 60 days to present a cost-cutting plan and will provide taxpayer assistance to keep it afloat during that time.

Along with Mr. Wagoner’s ouster, the task force said most of the company’s board would be replaced over the next few months. In a statement Monday, Mr. Wagoner said he had been urged to “step aside” by administration officials, “and so I have.”

His resignation is the latest example of the government taking a hands-on role in making major decisions at companies it is bailing out. The government has already pushed banks to make management changes and sharply reduce or eliminate their dividends, and it also is directing many of the decisions at the troubled insurance giant American International Group, which is nearly 80 percent owned by the government after its rescue.

The merits of the strategy can be debated but my concern here is the murky environment the government is creating for property rights. The problem with all this is that these are publicly owned companies (actually GM is publicly owned but Chrysler is owned by private equity.) How can the government force out the executives and the board? It's the shareholders that are supposed to own these companies. I'm not a lawyer but my layperson view is that this is getting close to trampling on property rights (in this case, shareholder rights.)

One can claim that these companies would be bankrupt without the government funding. If so, then why isn't the government nationalizing these companies? If you don't nationalize it outright then you are doing an under-handed deal that may benefit shareholders while taxpayers get very little in return. The government will be open to accusations of favouratism and various other unethical behaviour.

Ideally, though, the government should only provide funding and fire the board and executives after the company declares bankruptcy. Then, the government wouldn't be trampling on any rights, although it will set off a battle with bondholders. (But some argue that if the car companies declare bankruptcy, they will lose customers and will have difficulties surviving.)